Hershey Foods (HSY)

What is the Board proposing?

The Board is proposing that you ratify the Audit Committee’s appointment of KPMG LLP as the Company’s independent auditors for 2009. The Audit Committee and the Board consider KPMG LLP to be well-qualified for that role.

What is the Board proposing?

The Board is proposing that you ratify the Audit Committee’s appointment of KPMG LLP as the Company’s independent auditors for 2008. The Audit Committee and the Board consider KPMG LLP to be well-qualified for that role.

What is the Board proposing?

The Board is proposing that you approve The Hershey Company Equity and Incentive Compensation Plan. We call this plan the “EICP.” The plan that is the subject of this proposal is an amendment and restatement of our Key Employee Incentive Plan (we call this plan the “Incentive Plan”), and also a continuation of our Broad Based Stock Option Plan and Broad Based

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Annual Incentive Plan (we refer to these plans together as the “Broad Based Plans”) and our Directors’ Compensation Plan.

We have a well-established policy of rewarding results, at all levels of our organization, through our compensation and incentive programs. Our annual incentive programs are linked to performance measures based on business objectives. We have a history of tying a portion of pay to our long-term stock performance for all employees, not just officers, and for our board members as well.

We have provided this compensation to our executives and senior management through annual incentive, stock option and performance awards under the Incentive Plan, to non-executive employees through Company-wide annual incentive and stock option grants under the Broad Based Plans, and to directors through restricted stock unit, Common Stock and deferred stock unit grants under the Directors’ Compensation Plan. Each of these plans was last reviewed and updated in 2002, with the exception of the Broad Based Annual Incentive Plan adopted in 2006.

The Compensation and Executive Organization Committee of our Board, which we refer to in this Proposal as the “Committee,” and the Board reviewed the Incentive Plan, Broad Based Plans and Directors’ Compensation Plan and determined that to best be able to continue to provide necessary and long-term annual compensation and incentives, these plans should be updated. This updating is reflected in the EICP and includes:

The Board approved the EICP at its February 13, 2007 meeting, to be effective upon an affirmative vote of a majority of the shares present in person or represented by proxy at the annual meeting. The vote is needed to satisfy certain regulatory, New York Stock Exchange and tax rules. If the EICP is approved, no further grants will be made under the Broad Based Plans and stock awards paid to our non-employee directors under the Directors’ Compensation Plan will be made through the EICP. If the EICP is not approved, the Incentive Plan, Broad Based Plans and Directors’ Compensation Plan will continue in their current forms.